The Driving Alternative Inc. v. Keyz Thankz Inc., 2014 FC 559

This was a motion for summary judgment by the Plaintiff, who sought relief for trade-mark infringement, passing off, depreciation of goodwill, and likelihood of confusion. The Defendants filed no material in response to this motion.

The Plaintiff owned two registered trade-marks, KEYS PLEASE and THE DRIVING ALTERNATIVE, for use in association with (among other things) driving services. The Plaintiff has operated business out of Alberta, British Columbia, Saskatchewan, Manitoba and Ontario. For a brief time, the Defendants were licensed to operate a franchise using the Plaintiff’s trade-marks in Ontario. The license was terminated by the Plaintiff for non-payment of royalties. However, subsequent to the termination of the license, the Defendants continued to operate a driving service under the mark KEYZ PLEAZE. The Plaintiff became aware of this, and demanded that the Defendants cease and desist using all confusing marks. In response, the Defendants signed an undertaking to “cease using… all use of any trademarks causing or potentially causing confusion” with the Plaintiff’s trade-marks, as well as the marks KEYZ PLEAZE and KEYS PLEZE. However, after signing the undertaking, the Defendants incorporated the corporate Defendant KEYZ THANKZ and operated a driving service in Ontario under that name. The Plaintiff once again sent the Defendants a cease and desist letter, to which the Defendants refused to comply.

There was some dispute over the applicable limitation period: the Defendants argued it was 2 years (under the Limitations Act of Ontario), while the Plaintiff submitted it was 6 years (under the Federal Courts Act). The Court agreed with the Plaintiff, since the cause of action in this proceeding did not arise exclusively within the province of Ontario, and since the Defendants caused damage to the Plaintiff beyond Ontario. The Court stated that “it seems unjust to bar, by way of a provincial statute of limitations, national trade-marks rights of the Plaintiff.”

The Court found that the Plaintiff established its cause of action under each claimed ground, including trade- mark infringement, likelihood of confusion, passing off and depreciation of goodwill. The Court also found one of the personal Defendants liable (in addition to the corporate Defendant) since, on discovery, he stated “I am the company” and “I oversee everything”.

With respect to damages, the Plaintiff claimed $350,000, a figure that it argued would have been payable to it, as royalties, by the Defendant during the relevant period. The Defendants argued that any award of damages should be mitigated by the fact that the Plaintiff failed to exercise its rights for approximately 5 years, and since the Plaintiff had no franchise in Ontario since 2005. The Court accepted that these factors weighed against the amount of damages sought by the Plaintiff. However, since the Defendants did not cross-examine any of the Plaintiff’s affiants, nor file any rebuttal evidence, the Court drew an adverse inference in this regard against the Defendants. Therefore, the Court accepted the Plaintiff’s estimate and awarded damages in the amount of $25,000 for each of the years of infringement, for a total damage award of $225,000. In addition, due to the Defendants’ “lack of regard” for the Court’s process resulting in “unduly lengthened proceedings”, and their “willful blindness to their ongoing infringement”, the Court awarded solicitor and client costs to the Plaintiff.